Globalization

Globalization refers to the interaction of one economy with all the other economies of the world.
This interaction can be in terms of financial transactions, trade, politics, education, production
etc. Globalization picked up steam with the invention of newer and newer technologies in the
world of transportation and communication. Thus, it can be seen that though globalization is
traced back to ancient times by historians, it truly began at the end of the 19th and beginning of
the 20th century. The term Globalization, in its newest form, has four major parameters:

1. Free flow of goods and services between countries due to the reduction in trade
barriers.
2. Creation of an environment for flow of capital and investment among countries.
3. Free flow of technology from one country to another.
4. Free movement of labor among countries.
True globalization is attainable only if all four components are present. However, globalization
has some advantages and some disadvantages. Some of these advantages and disadvantages are:

Advantages:

· Increase in employment opportunities: As globalization increases, more and more companies

are setting up businesses in other countries. This in turn increases the employment opportunities
that people atone place have. People can get better jobs without having to move to other
countries in search of better jobs. Today, many multinational companies such as Microsoft,
Google and Toyota etc. have their offices in India and many Indians work for these companies in
India. Without globalization, Indian people would not have had the opportunity to work for such
companies in India.

· Education: With the increase in globalization, it has become easier for people to move across
borders to different parts of the world to acquire better education. This has resulted in an
integration of cultures. People from underdeveloped and developing countries often move to
developed countries to get better education. More and more Indian students are traveling to
countries like the UK or the USA to pursue higher education. This has also opened their cultures
towards the Indian culture to some extent.
· Increase in free trade: An increase in free trade has opened doors for investors in developed
countries to invest their money in developing countries. Big companies from developed countries
have the freedom to operate in developing countries. In the 2000s, Japanese and European
companies such as Kawasaki and Siemens started producing high-speed trains in China. This
helped Chinese firms in gaining knowledge about the production process and now Chinese
companies such as China South Locomotive & Rolling Stock Corp. are producing high-speed
trains on their own.

· Faster flow of Information: Information flows from one part of the world to the other
immediately, resulting in the world being tied together. Vital information can be shared between
individuals and corporations at a very fast rate. It has also facilitated in increasing the ease of
transporting people and goods.

· Increase in quality of goods and services: As a result of globalization, people have access to
the best quality of goods and services throughout the world. Companies have to strive to provide
better quality goods and services to the consumer and the consumer has the liberty of choosing
whichever product he thinks is best suited for his needs. This allows a person in America to wear
clothes made in India and Mexico while watching a football match taking place in England on a
TV made in China.

· Decrease in prices of goods and services: As the competition in the market has increased due
to rapid globalization, producers have to price their products competitively in order to remain in
the market. This has become a boon for the consumer as he can get better quality products at
cheaper prices. An example is that of the car Ambassador in India. It was the only car available
in India along with the Fiat before the liberalization of the Indian Economy. These cars were
inefficient and expensive. Once the Indian economy was opened, other car companies started
selling their cars in India at cheaper prices. This was a major benefit for the Indian consumer.

· Reduction in cultural barriers: As people move from one country to another, barriers
between various cultures tend to decrease. This has resulted in tolerance and openness towards
other cultures. This has also facilitated communication between different cultures and hence,
nations. It has also led to a reduction in wars as we are today living in one of the most peaceful
periods in the history of mankind.
Ability to tap into a wider talent pool

When fully taking advantage of globalization, you are no longer restrained by talent that is
available in your city. Today your remote workforce could work from anywhere in the world
with an internet connection opening you up to the brightest and best candidates the entire world
has to offer.

Cultural diversity

Businesses are experiencing increasingly diverse workforces as a result of a globalized economy.

This includes teams working across different locations, people traveling and moving countries
for work, having a range of different work ethics and practices and even religious differences.
All of these can be challenges, but overwhelmingly are a positive thing in the workplace as it
brings together different ideas and insights and perspectives.

Coaching and training

With more diversity comes a need for more coaching and training of employees, particularly
around cultural competency to help workers form different backgrounds connect with and
understand one another. With this level of coaching and training, your business is more likely to
be successful.

Improved information between different countries

Globalization helps to break down more than just trade barriers, it helps countries communicate
and collaborate and share knowledge.

Larger markets

Openness to trade brings bigger and better opportunities to the economy including larger markets
and increased opportunities to specialize. This includes global economic growth, job creation,
more competitive companies and lower prices for consumers.
Higher standards

For less developed countries, globalization can be a blessing as it increases standards of living
such as health and welfare and safety conditions in the workplace. Companies from more
developed nations tend to have to comply with regulatory requirements in their home countries
and transfer these expectations when they operate in other parts of the world.

Of course there are some down-sides to globalization as well. Some of the disadvantages
include:

Disadvantages:

·Environmental degradation: Developed countries can take advantage of underdeveloped

countries’ weak regulatory laws in terms of environmental protection.

· Unfair working conditions: Many multinationals have been accused of social injustice by
exploiting labor in underdeveloped countries in order to cut costs. Labor are provided unhealthy
working conditions leading to health hazards. Many large companies have also been accused of
using child labor in their factories in underdeveloped countries. Nike’s much publicized use of
child labor along with poor working conditions and low wages in its factories in Indonesia is a
well-documented example.

· Fall in employment growth rate: Though the promotion of the idea that the advances in
technology and increase in productivity would create more jobs has been a cornerstone of
globalization, it has been seen that in the past few years, such advances have led to a decrease in
the employment growth rate in some developing economies. This can also be attributed to the
fact that companies move their production facilities from one place to another in search of
cheaper labor once the workers in the previous country start demanding better wages.

· Growing disparity among the rich and the poor: 86% of the world’s resources are said to be
consumed by the richest 20% of the world population. This means that the poorer 80% only gets
to consume 14% of the world’s resources. This is a direct result of globalization according to
some activists who believe that globalization only serves the rich whereas the poor have to face
its disadvantages.

· Small scale industries face extinction: Small scale industries which are indigenous to a
particular place face extinction as they do not have the resources or the power that the
multinational companies have. As a result, these small industries are unable to compete with
bigger companies and go out of business. An example is the bamboo furniture making industry
in India. The manufacturers work out of their homes and work hard to make furniture out of
bamboo. These workers cannot compete with large companies selling cheap plastic furniture and
as a result, their industry faces extinction.

· Rapid spread of deadly diseases: Deadly diseases such as AIDS or other communicable
diseases can spread at very fast pace via travelers or due to other means as a direct consequence
of globalization.

Hollowing out of work

Globalization has been blamed for the loss of millions of jobs around the world – in particular
middle-wage, middle skilled jobs like managers, assembly line workers or secretaries.

These jobs are often outsourced to regions that have lower wages, or are being replaced entirely
by rapid advances in technology, making them obsolete. The jobs that remain are the higher paid
and lower paid jobs, meaning the middle has been “hollowed out”.

Earnings changes

With more and more companies accessing overseas outsourcing opportunities, wages have
decreased for many workers in the original countries. Companies in the developing world are
able to offer their services at a much reduced rate from those who live in countries with greater
living standards. This means that workers in larger countries are affected.

Social injustice
Many multinational corporations have been accused of exploitation when working in poorer,
developing countries and delivering unfair work conditions such as slave labor, poor standards of
living and unsafe working practices. They are also often accused of damaging the environment
and depleting it of natural resources and causing problems with ecological systems.

Many opponents of globalization say that it has worsened inequality internationally with the
richest 20 per cent of the world population consuming 86 per cent of the world’s resources and
the poorest 80 per cent of the world’s population consume just 14 per cent of the world’s
resources.

Multinationals with political influence

Some multinational corporations no longer just limit themselves to corporate activities and
become part of politics and actively attempt to influence political decisions in some parts of the
world.

Potential for IP theft

When products are built overseas in factories on behalf of a company based in another country,
there is potential that intellectual property and designs could be copied and stolen and replicated
and sold for cheaper elsewhere.

Internal communication challenges

When you work across time zones, cultures and countries and have a workforce that is not
always even online at the same time, let alone in the same room at the same time, reaching
everyone and communicating effectively can be a challenge unless managed strategically. For
example, investing in Desk Alerts to send pop-up notifications straight to employees’ desktop
screens, no matter where they are located in the world, scheduled to reach them at the
appropriate time in their time zone, written in their language.